CCS: Outlook and Challenges

1. CCS: Outlook and Challenges 25 October 2010 Wolf Heidug Carbon Capture and Storage International Energy Agency

2. CONTENTS • Why CCS? • Is CCS happening? • What are the challenges for wider deployment?

3. CONTENTS • Why CCS? • Is CCS happening? • What are the challenges for wider deployment?

4. CO2 EMISSIONS FROM ENERGY TO 2050 • 29 GtCO2 in 2007 • Baseline: double to 57 GtCO2 in 2050 • BLUE Map: halved to 14 GtCO2 in 2050 • A wide range of low-carbon technologies contribute to the BLUE Map scenario CO2 emission reductions

5. ROLE OF CCS IN EMISSION CUTS • 2nd largest share (19%) of CO2 reductions in 2050 • 31% of CO2 reductions in power sector in 2050 • In 2050, 90% of coal-electricity is from CCS plant • Scenario without CCS-power: + USD 4,7 trillion additional investment cost 2010-2050 • In industry & fuel transformation, CCS contributes to 33% of direct emissions reductions

6. CCS: CHALLENGING DEPLOYMENT MtCO2/year Captured • Ambitious growth path 2010-2050: • - 3400 projects operational in 2050 • 145 Gt stored 2010-2050

7. CCS NOT ONLY ABOUT “CLEAN COAL” Coal power only makes up around 40% of stored emissions in 2050

8. SO WHY CCS? • CCS is part of the solution • CCS has enormous potential to cut emissions globally • CCS can help achieve climate goals cost-effectively • CCS is not only about power • CCS is not only about coal But, deployment pathway is very challenging and 2010-2020 is a critical period to kick-startdevelopment

9. CONTENTS • Why CCS? • Is CCS happening? • What are the challenges for wider deployment?

10. CO2 IS CAPTURED AND STORED AS WE SPEAK… Weyburn >2,3Mt Sleipner 1Mt Snohvit 0,7Mt In Salah 1,2Mt Rangely 1Mt Five large-scale projects are successfully storing CO2

11. … AND MORE IS PLANNED 85 integrated large-scale projects in various stages of development Source:

12. GLOBAL CCS DEMONSTRATION:STATUS • Operational large-scale integrated projects: • gas separation & EOR • none in the power sector • Significant new project development activity: • especially for CCS in coal-fired power generation • Other large stationary emissions sources such as steel and cement production significantly under-represented • Clusters of projects in North-America, Europe and Australia • In terms of a “balanced portfolio”- significant under-representation in developing countries Source:

13. SO IS CCS HAPPENING? • Technologies to capture, transport and store CO2exist • Large-scale projects are being operated • More demonstration activities are planned • New demonstration concentrated in OECD countries and in the power sector

14. CONTENTS • Why CCS? • Is CCS happening? • What are the challenges for wider deployment?

15. Challenges I:UNCLEAR STRATEGIC DIRECTION • Lack of broad understanding (and belief?) of the scale and urgency of action required to address climate change • Currently no global binding commitment to cut CO2 emissions • Limited public and government understanding of CCS, of its positive and negative features and of the role of CCS within the broader technology portfolio • Limited attention on industrial CCS applications

16. Challenges II:INCOMPLETE REGULATION • Lack of legal and regulatory frameworks for CCS demonstration and for broad deployment in many parts of the world, especially in key non-OECD countries • Outstanding issues in domestic legal and regulatory frameworks e.g. long-term liability • Outstanding international legal issues e.g. ratification of the London Protocol and OSPAR amendments

17. Challenges III:UNDERSTANDING CO2 STORAGE • No common methodology to estimate storage capacity • Uneven data on global/regional/national storage capacities • Limited appreciation of the time required to select and characterise a CO2 storage facility • Significant uncertainty on who should be responsible for long-term liability • Lack of public awareness and acceptance IEA GHG, GCCSI

18. Challenges IV:MONEY & KNOWLEDGE SHARING • Insufficient or slowly emerging financing by industry and governments for CCS demonstration • Limited incentives for commercial-scale deployment • No broad mechanism for financing CCS in non-OECD countries • Lack of global knowledge-sharing mechanism for demonstration projects GCCSI

19. Challenges V:TECHNOLOGY & INFRASTRUCTURE • High capital and operating cost with today’s capture technology • But how different is this from other new energy technologies? • Is technology really a problem? • Limited knowledge of true cost of storage • Slow progress in pipeline infrastructure planning and coordination Fortum Vattenfall Alstom

20. SO WHAT ARE THE CHALLENGES? • Understanding, communicating the role of CCS • Getting regulation right • Increasing knowledge on storage capacities • Developing financing/incentive mechanisms, also in non-OECD countries • “Technology is the least of our problems”pathway is very challenging and 2010-2020 is a critical period to kick-startdevelopment

21. CCS @ IEA: ACTIVITIES SO FAR • CCS-specific analysis and publications • CCS in wider context: ETP, WEO, country reviews • Engagement with global fora: G8,G20, Major Economies Forum, Clean Energy Ministerial • Outreach to non-OECD countries • Knowledge-sharing: CCS Regulatory Network, webinars, website, articles, presentations etc. • IEA standing committees • Committee on Energy Reserach and Technology, Standing Committee on Long-Term Cooperation, Coal Industry Advisory Body • IEA Working Party on Fossil Fuels • IEA GHG R&D Programme and Clean Coal Centre

22. PUBLICATIONS TO DATE 2004 2005 2006 2007 2008 2009 2010

23. CCS @ IEA: WORK PROGRAMME CCS Strategy & Policy Technical & Economic Capacity-Building & Outreach Legal & Regulatory Stakeholder Relations & Global Policy Fora

24. Thank you!